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M/s NIRMA LIMITED Versus Commissioner of Central Excise, Vadodara 1

Demand of duty on export of goods without payment of duty - export of Linear Alkyl Benzene (LAB) under UT-I for export under the provision of Rule 19 of Central Excise Rules, 2002 - it was noticed that 7.921 M.T. of LAB were short shipped/not exported by the applicants. - Condonation of delay in filing revision application due the reason the applicant was pursing the matter with the wrong forum - Held that:- As such after excluding time elapse before Tribunal, the applicant filed the Revisional .....

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d after considering the nature of loss being occurred specifically in NGL has prescribed the percentage for the particular item only. Admittedly, the goods manufactured and cleared by the assessee is not NGL and as such they are not eligible for the benefit of the above circular, as rightly held by the Commissioner (Appeals). - Demand confirmed - Decided against the assessee. - F. No. 195/457/2012-RA(CX) - ORDER NO. 57/2016-CX - Dated:- 29-4-2016 - SMT. RIMJHIM PRASAD, JOINT SECRETARY ORDER: Thi .....

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r Alkyl Benzene (LAB) falling under Chapter 38 of the Central Excise Tariff Act, 1985. The Applicants had cleared LAB to various locations under UT-I for export under the provision of Rule 19 of Central Excise Rules, 2002, in the months of November, 2007 and May, 2008. On scrutiny of proof of export documents filed by the appellants on 24.01.2008 and 02.06.2008, it was noticed that 7.921 M.T. of LAB were short shipped/not exported by the applicants. The applicants requested for remission of duty .....

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do so. Accordingly, a Show Cause Notice was issued for recovery of Central Excise duty amounting to ₹ 85,435/-, interest at the appropriate rate and proposing for imposition of penalty under Rule 25 of Central Excise Rules, 2002 read with Section 1 IAC of the Central Excise Act, 1944. The Show Cause Notice was adjudicated by the impugned Order-in-Original dated 17.03.2009 confirming Central Excise duty of ₹ 85,435/L along with interest at the appropriate rate and imposing a penalty .....

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f penalty is set aside. 4.Now the applicant has filed this Revision Application under Section 35EE of Central Excise Act, 1944 before Central Government on the following grounds: 4.1 The applicant submit that the only issue to be acceded in the present case is about condonation of losses by way remission of duty under Rule 21 for the short quantity occurred due to natural causes, during transit, storage and handling etc. in export goods, cleared from factory to port of export. 4.2 That the LAB c .....

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xcise Rules. 4.3 That the Commissioner (Appeals) rejected the claim of the Applicant mainly relying upon Board's Circular No.292/8/97-CX dated 24.01.1997 and held that the Circular is applicable only to the product NGL falling under tariff heading No.27101190 and not applicable to other products viz. LAB falling under tariff heading No.38170011 and no other goods. 4.4 That it is submitted that the instructions issued by the Board is only a guideline to the officers for uniformity in taking t .....

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Commissioner (Appeals) has neither discussed nor given any findings but turned down, as they are not relevant. In fact he was bound to give the proper findings as to how and why the cited decisions are not relevant in the present case. This has not been done. Therefore, the impugned order is apparently violative of principals of natural justice. 4.5 It is further submitted that is true that the administrative instructions issued by the Board may not be binding on the adjudicating and Appellate a .....

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asi-judicial authority is required to assign reasons for not allowing the permissible condonation of loss and not allowing remission of duty under Rule 21 of Central Excise Rules. Therefore, the denial of the remission of duty on short quantity due to natural causes is violative of natural justice and not justifiable and so the impugned order required to be quashed and set aside. 4.6 It is further submitted that as per the clear provisions under Rule 21 of Central Excise Rules that remission of .....

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Therefore, the applicant is not required to pay any duty but the Commissioner (Appeals) should have granted the remission of duty in light of the following decisions. (1) 2004 (166) ELT 480 (Tri.Kolkata) - Ispat Alloys Ltd. (2) 2009 (233) ELT 61 (Raj.) - Hindustan Zinc Ltd. (3) 1996 (86) ELT 6 (All.) U.P. State Cement Corporation Ltd. Upheld by Supreme Court as reported in 1999 (112) ELT A44 (S.C.) (4) 2008 (221) ELT 246 (Tri.Delhi) - Upper Doab sugar Mills. (5) 2008 (225) ELT 271 (Tri.Delhi) - .....

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quantity is noticed which is only due to natural causes during transportation and handling the goods at different stages. The present case is of this kind / type this very fact was argued during personal hearing before the Commissioner (Appeals), who had indifferently distinguished the transportation in sealed containers where no shortage noticed. Unfortunately this has not been considered. Therefore, this ground is also not acceptable by any law and so could not be upheld. 4.8 That it is furth .....

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t quantity noticed as a result of natural causes. Therefore, the impugned order denying the benefit of remission of duty under Rule 21 of Central Excise Rules is not justifiable in law and so deserves it to be quashed and set aside. 5.The applicant vide letter dated 12.06.2012 also requested for condonation of delay in filing Revision Application on following grounds: 5.1During the period November 2007 and May 2008, we cleared LAB from our premises for Export under Bond/LUT without payment of du .....

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of duty on the short quantity of loss occurred which was below 1% i.e. within the limit of condonation. 5.2 The Assistant Commissioner instead of condoning the loss confirmed the demand of duty on the short quantity of loss which was upheld by the Commissioner(Appeals) Vadodara. 5.3 There are several decisions on the subject issue reported in ELT and other journals in which Honorable CESTAT has entertained and dealt with the appeals pertaining to transit/storage/handling losses. Therefore, unde .....

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No. A/651-652/WZB/ AHD/2012 dated 08.05.2012. Copy of which is enclosed herewith. Under the circumstances, we now file this Revision Application before your honor for consideration. Under the circumstances, we request your good self to be kind enough to condone the delay for late filing of Revision Application and admit the same in the interest of justice. 6.Personal Hearing in this case was scheduled on 06.07.2015 and 18.12.2015. 6.1Hearing held on 06.07.2015 was attended by Shri Motilal A. Pat .....

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rther submitted that we filed the appeal against the order of the Commissioner (Appeals) before the Hon'ble CESTAT on the ground that the Hon'ble CESTAT has admitted and took the decision in such types of cases in various decisions. Some of them are: (i) Associated Capsules Pvt. Ltd. reported in 2007 (207) ELT 613 (Tri. Mumbai) (ii) M/S Kuntal Granites Ltd. reported in 2007 (215) EL T 515 (Trib. Bang.) (iii) Sree Narasimha Textiles Ltd. reported in 2009 (239) EL T 86 (Trib. Chennai) and .....

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gainst the order of the Commissioner (Appeals) before your Honour immediately when decision pronounced in the open court on 8.5.12. Since initially we filed the appeal before the Hon'ble CESTAT within stipulated time period and also filed the revision application immediately after the decision of the Hon'ble CESTAT, before your Honour, the provisions of limitation in filing the revision application will not come into the picture. Therefore, taking into consideration of the aforesaid fact .....

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ismissed the petition as being barred by limitation, petitioner pleaded before Revisional Authority that period spent before Tribunal be excluded, but the contention was rejected without considering the import or applicability of Section 14 of Limitation Act, 1963. The High Court of P&H Held "that Question whether section 14 ibid applies to case in hand covered in favour of petitioner by a judgment of Punjab & Haryana High Court in Sonia Overseas Pvt. Ltd reported in 2015 (316) EL.T .....

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sion application. In addition to that we further submit that the facts in brief are that there is minor short quantity in export goods which is due to natural causes. It is an admitted and undisputed fact that this is not the case of the Department nor any allegation that the short quantity is due to the result of disposal of goods illicitly or the goods have been clandestinely cleared without payment of duty but the case of the Department is that the short quantity has been exported. Both the l .....

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ue to natural causes, duty is required to be paid or otherwise. 6.1.5 It is submitted that the grounds stated in Revision Application are required to be considered. In addition to that we further state that it is not the case of the Department that non-export of short quantity is as a result of removal of goods illicitly there is no such allegation by the Department. It is undisputed fact that short quantity is due to natural causes. Since the short quantity is much below 0.17 which is within th .....

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lus or minus is permissible up to 1. In the present case the less quantity is much below 1 i.e. 0.17, Therefore by applying the provisions under this act the short quantity of 0.17 is required to be ignored or condoned. 6.1.7 In this regard applicant place reliance on following cases laws : M/S Welspun Maxsteel Ltd. Reported in 2015 (317) ELT 0559 (Tri. Mumbai) 2010 (275) ELT 83 (Tri. Mumbai) in the matter of Somaiya Organo Chemicals Ltd. 2010 (249) ELT 218 (L.B) in the matter of Bhuwalka Steel .....

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Department vide their letter dated 16.12.2015 mainly reiterated contents of impugned orders and also placed reliance upon various case laws in support of the contention that this is not a case for remission of duty under Rule 21 of the Central Excise Rules 2002. 7.Government has carefully gone through the relevant case records available in case files, oral and written submissions and perused the impugned Order-in-Original and Order-in-Appeal. 8.Government first takes up the application for cond .....

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ling appeal before Tribunal : 06.12.2010 C. Total time taken in filing appeal before Tribunal A - B :2+30+5=37 Order-in-Appeal days. D.Date of communication of Tribunal's Order dated 08.05.2012: 14.05.2012 E.Date of filing Revision Application . 25.05.2012 F.Time taken in filing Revision Application since the date of. 12 days Communication of Tribunal Order D E G.Total time taken for filing Revision Application after. 37+12= 49 excluding time lapsed during proceedings before CESTAT C+F days .....

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the benefit of the provision of Section 14 of Limitation Act, 1963 while reckoning the time limit for filing revision application. 8.3 As such after excluding time elapse before Tribunal, the applicant filed the Revisional Application in 49 days. As such the Applicant has been filed within the stipulated period. Government now proceeds to examine the case on merits. 9. On perusal of records, Government observes that the applicant cleared Linear Alkyl Benzene (LAB) under Rule 19 of the Excise Rul .....

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ieved by the order, the applicant filed appeal before Commissioner(Appeals) who is vide impugned Order-in Appeal modified Order-in-Original in as much as order of imposition of penalty was set aside. Now, the applicant has filed this Revision Application on grounds mentioned in para(4) above. 10.Government observes that demand was raised on the applicant for failure to export certain quantities of goods. The applicant in response stated that they had already applied for remission of duty under R .....

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plicants failed to give evidence to prove that NGL and LAB belong to the same group there was no cause to interfere with the impugned Order-in-Original. 11.Government observes that the main contention of the applicant is that the short shipment of the impugned goods has occurred due to storage and handling loss in the course of transit from the factory to the port. As the loss has occurred due to natural causes they are entitled to remission under Rule 21 of the Central Excise Rules, 2002. 11.1R .....

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goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal. Therefore, if any of the eventualities had occurred after the removal of goods, there are no governing provisions under Rule 21 of Central Excise Rules, 2002 empowering the Central Excise Officer to remit the duty payable on the goods destroyed by natural causes. Therefore, the applicant's contention that they .....

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damaged. As the impugned goods were not exported in terms of the bond executed by the appellants, they are required to discharge the duty due on those goods. The duty liability on-the impugned goods could be-waived only if there are enabling provisions in the statute. Rule 21 of Central Excise Rules, 2002 which provides for remission of goods destroyed in accidents is subject to the condition that the damage is suffered by the excisable goods before their removal from the factory. In the instant .....

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ld that waiver of duty is not claim able if goods are destroyed by fire after clearance and before export. The ratio of the Tribunal's decisions are to the effect that duty is liable to be paid by the assessee in respect of goods cleared for export and destroyed before export. Respectfully following the above ratio, I find that the appeals to be devoid of merit Therefore, the appeals are dismissed 11.2.2 The Tribunal in the case of Ginni Filaments Ltd. vs. CCE, Lucknow 2005 (188) E.L.T. 45 ( .....

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17) 793 (Tri.- Del), it was held as under: 7. From plain reading of this Rule, it is clear that remission of duty in respect of the goods lost or destroyed due to natural causes or by unavoidable accident is permissible only when this loss or destruction has taken place 'Vat any time before removal". Thus the point of time when the loss or destruction should take place is the time before the "time of removal". In my view the words "at any time before removal", cannot .....

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al" is the port from where the goods are exported, the "time of removal" would be the time when the goods have been cleared from the factory and, therefore, if the goods are lost during transit, for the purpose of Rule 21, the "time of removal" would have to be treated as the time at which the goods were cleared from the factory. In the judgments of the Tribunal in the cases of Kuntal Granites Ltd vs CCE, Bangalore (supra) and CCE, Coimbatore vs Sree Narasimha Textiles L .....

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ed in 2004 (167) E.L.T. 414 (Tri. - Bang.), CC, Jaipur- llvs Hindustan Zinc Ltd. reported in 2012 (275) E.L.T. 136 (Tri. - Del.) and Meghmani Industries Ltd. vs CCF, Ahmedabad- I reported in 2007 (218) E.L.T. 50 (Tri. - Ahmd.), wherein a contrary view has been taken and it has been held when the goods after clearance from the factory for exports are lost in transit, the remission of duty under Rule 21 would not be admissible. The appeal is, therefore, dismissed 11.2.4 Further Government in its o .....

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